Focus on Life Sciences: Kansas Tax Relief Measures

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Kansas Governor Sam Brownback recently signed one of the largest tax relief measures in Kansas history. At the heart of the tax changes is a reduction of individual tax rates and a shift from a three-bracket to a two-bracket system.

June 27, 2012

Kansas Governor Sam Brownback recently signed one of the largest tax relief measures in Kansas history. At the heart of the tax changes is a reduction of individual tax rates and a shift from a three-bracket to a two-bracket system.

For tax years beginning January 1, 2013, instead of individual taxpayer rates of 3.5, 6.25 and 6.45%, rates will reduce to 3.0 and 4.9%. Corporate tax rates will remain unchanged.

The bill also provides an exemption which eliminates certain non-wage business income and/or losses reported by LLCs, partnerships, S Corporations and sole proprietorships from Kansas individual taxable income. Therefore, any income reported from a K-1 is not subject to Kansas individual income tax.

Due to this exemption, a flow-through entity should be considered when starting a new business in Kansas. Also, companies currently structured as a C Corporation should consider an election to be treated as a S Corporation. Your tax advisor should be consulted when determining the entity structure.

Other changes include increases to the standard deduction for head-of-household from $4,500 to $9,000, and for married taxpayers filing jointly from $6,000 to $9,000.

Certain tax credits will be repealed such as the food sales tax rebate and the child and the dependent care credit.

RubinBrown has a dedicated group focused on the Life Sciences Industry to provide assurance, tax, and business advisory service to businesses in this industry group. Specialized segments include animal health, plant sciences, human health, and renewable energy.

Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.